Korea Productivity Association


pISSN: 1225-3553

생산성논집, Vol.33 no.3 (2019)

DOI : 10.15843/kpapr.33.3.2019.09.69

An Analysis on the Growth Factors and Organizational Performance of Small Giant Enterprises in South Korea

Dongho Kim

(PhD, Department of Business Administration, Dongguk University-Seoul)

Sang Hyeon Sung

(Professor, Department of Business Administration, Dongguk University-Seoul)

Big shadows hung over to the small and medium-sized enterprises (SMEs) by large conglomerates have made the growth of SMEs limited as they have to play restricted roles as suppliers to their large companies along with the supply chains. Thus appropriate innovation or disruptive changes of SMEs have been restricted in the era of the 4th industrial revolution. The structural changes of economy in South Korea require lots of SMEs which have competitive technological advantages in the field of parts, materials and equipments. Not only cost competitiveness but also technological excellence of SMEs is essential for the vitality of economy, and the balance between large companies and SMEs also can be facilitated by the growth of SMEs. What should be done for this? Creation of small but strong SMEs, that is, small giant enterprises (SGEs). This study tried to discover the growth factors needed by SMEs in becoming SGEs which can exert their power in the global market. Based on the sample from a group of Korean government-selected candidates for SGEs, which is called ‘World Class 300 companies’, we tested hypotheses focusing on the analysis on the relationships between the core growth factors. The relations between innovation capability, talent management, and transformational leadership as well as the impact of these on the subjective and objective organizational performances were analyzed. Empirical analysis supported the significant strong relationships between growth factors and ROE(objective performance) as well as job satisfaction(subjective performance). The mediation effect of leadership between the innovation capability as well as talent management and performance was found in this study. These results imply the importance of SGEs' ability to innovate, secure talent, and furtherly, having proper leadership which bridges them to the performance. This study shows that securing systematic talent management and investing in them for retention are indispensable to attain better returns on investments. The paper suggested that transformational leadership is effective for the growth of SGEs. This also contributed to connecting the organizational unit research and individual-level leadership. Leadership is perceived differently by individuals because of the changing patterns of leadership along with time and situation. We discussed some theoretical backgrounds on these findings. Practical implications are also suggested, that is, the importance of R&D investment to facilitate the innovation capability and systematic talent management to secure professional manpower. Transformational leadership is a key driving force in the Korean context as it would be difficult to achieve outstanding results without appropriate leadership exercise. Therefore these results suggest that Korean economy requires systematic development of ecosystem for SGEs and government-level support to secure core growth factors considering the poor resources of the domestic SGEs. Some limitations related with sample, single-level analysis, construct of SGEs are also discussed.

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